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Still Hanging In There ! March 12, 2011

Posted by Tom in Thoughts.

My market health model is still “Bullish / OK to Buy”, but just barely.  I’m still looking for a close on the S&P 500 Index below 1294 to confirm a turn to Bearish.

The market is obviously weak.  News from Japan to Libya to domestic wrangling is not very positive for investing.  But, this is the environment where low risk entries are made.  Why now ?  Because you (should) know your risk.  If your stock heads down from here, you (should) know immediately that you were wrong and exit.  The risk is greater at a top, not at the bottom.

So . . . the question is: Is this an intermediate bottom?  We should know by Monday as a majority of investors digest news.  (Watch out for the first half hour; this is amateur hour and is not a sign of anything.) 

I sound like a broken record, but this last market run up IS due for a pause if not a correction.  The economics are turning more favorable though.  If oil doesn’t stay above $100/barrel for too long, the US economy should continue to trudge along and improve.

So, what to do?  Study what sectors are improving the fastest and get ready to enter those areas IF this becomes a typical bump along the road.  Always be careful; this could be a “Bull Trap”, a short recovery before the ultimate fall.  No One Knows, so we must all be vigilant.

Nobody cares more about your money than you do.  And that’s the way it should be.   Have a good week.


1. Zada - March 13, 2011

Awesome piece of writing, I really count on posts by you.

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